PROFITABILITY ANALYSIS OF NEPAL BANK LIMITED

By
AASHISH PATHAK

Exam Roll No. 23632/19

TU Registration No. 7-2-241-614-2019

A Summer Project Report Submitted to

Faculty of Management, Tribhuvan University
in partial fulfillment of the requirements for the degree of

Bachelor of Business Administration

at the
Balkumari College
Tribhuvan University

Narayangarh, Chitwan
April, 2024
 STUDENT DECLARATION

This is to certify that I have completed the Summer Project entitled "Profitability
Analysis of Nepal Bank Limited" under the guidance of "Kul Chandra Pandit" in
partial fulfillment of the requirements for the degree of Bachelor of Business
Administration at Faculty of Management, Tribhvan University. This is my original
work and I have not submitted it earlier elsewhere.

Date:

Signature:
Name: Aashish Pathak

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 CERTIFICATE FROM THE SUPERVISOR

This is to certify that the summer project entitled" Profitability Analysis of Nepal
Bank Limited" is an academic work done by Aashish Pathak submitted in the partial
fulfillment of the requirements for the degree of Bachelor of Business Administration
at Faculty of Management, Tribhuvan University under my guidance and supervision.
To the best of my knowledge, the information presented by him in the summer project
report has not been submitted earlier.

……………………
Kul Chandra Pandit
Supervisor
Date:

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 ACKNOWLEDGMENT

The summer project entitled "Profitability Analysis of Nepal Bank Limited" is

prepared in the partial fulfillment of the requirement for the degree of Bachelor of
Business Administration (BBA). I would like to thank all those who have directly and
indirectly help and supported me in many ways. I owe a gratitude to many co-
operatives helping hands to help me in many ways for providing me precious
information.
I am very much thankful to my supervisor Kul Chandra Pandit for his continuous
support. His valuable suggestion, guidance, constructive comments have helped me a
lot to prepare report. I would also like to give a word of thank to my friends and
senior students for their support and inspiration. Without everyone's support and
guidance this project would not have been successful.

Aashish Pathak

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 TABLE OF CONTENTS

Title Page……………………………………………………………………………….............i
Student Declaration.......................................................................................................ii
Certificate from the Supervisor.....................................................................................iii
Acknowledgments..........................................................................................................iv
Table of Contents............................................................................................................v
List of Tables................................................................................................................vii
List of Figures.............................................................................................................viii
Executive Summary.......................................................................................................ix
CHAPTER I: INTRODUCTION............................................................................................1
1.1Background of the Study...................................................................................................1
1.1.1 Overview of Nepal Bank Limited..............................................................................1
1.1.2 Statement of the problem...........................................................................................2
1.2 Purpose of the study..........................................................................................................4
1.3 Significance of the study..................................................................................................4
1.4 Limitations of the study....................................................................................................4
1.5 Literature survey...............................................................................................................5
1.5.1 Conceptual review.....................................................................................................5
1.5.2 Review of previous works.........................................................................................9
1.6 Research methodology....................................................................................................13
1.6.1 Research design.......................................................................................................14
1.6.2 Population and sample.............................................................................................14
1.6.3 Nature and sources of data.......................................................................................15
1.6.4 Data collection procedure........................................................................................15
1.6.5 Tools for data analysis.............................................................................................15
CHAPTER II: DATA PRESENTATION AND ANALYSIS..............................................17
2.1 Organization profile........................................................................................................17
2.2 Data presentation............................................................................................................18
2.3 Data analysis...................................................................................................................19
2.3.1 Profitability position of Nepal Bank Ltd.................................................................19
2.4 Findings and discussion..................................................................................................28

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CHAPTER III: CONCLUSION AND ACTION IMPLICATIONS..................................29
3.1 Conclusion......................................................................................................................29
3.2 Action implications.........................................................................................................30
References.................................................................................................................................32
Appendices..................................................................................................................................a

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 LIST OF TABLES

Table 1.1 Capital Structure of Nepal Bank Limited 2

Table 2.1 Profitability of Nepal Bank Ltd 20
Table 2.2 Return on equity of Nepal Bank Ltd 21
Table 2.3 Return on assets of Nepal Bank Ltd 22
Table 2.4 EPS and MPS 24
Table 2.5 DPR and P/E ratio 25
Table 2.6 Net profit margin 26

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 LIST OF FIGURES

Figure 2.1 Profitability of Nepal Bank Ltd 20

Figure 2.2 Return on equity of Nepal Bank Ltd 22
Figure 2.3 Return on assets of Nepal Bank Ltd 23
Figure 2.4 EPS and MPS of NBL 24
Figure 2.5 DPR and P/E ratio of NBL 26
Figure 2.6 Net profit margin of NBL 27

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 EXECUTIVE SUMMARY

As a partial fulfillment of degree of Bachelor of Business Administration, the

university has assigned every students of BBA to conduct a summer project regard to
an organization that can be of financing or non-financing organizations. So far as to
conduct a summer project I have selected a Bank named Nepal Bank Limited (NBL).

The major objective of the study is it partial fulfillment of the requirement for the
degree of Bachelor of Business Administration (BBA) as prescribed by Tribuvan
University. The general objective of the study is to access the theoretical knowledge in
practical one. But the specific objective of this study is to assess the position of the
company in terms of profitability and identify the strength, weakness, opportunities,
and threats of the proposed organization.

This executive summary offers a comprehensive overview of the profitability analysis

of Nepal Bank Limited (NBL). Established in 1937, NBL has emerged as a
cornerstone of Nepal's banking sector, serving as a vital financial institution with a
wide-reaching network. Through an examination of key financial indicators, this
analysis provides insights into NBL's operational efficiency, revenue generation, and
shareholder value. This study attempts to examine the financial performance of Nepal
Bank Limited, special reference to profitability analysis with available data and
information. It also deals with identification besides this field study, to acquire the
reality of banking operation of Nepal Bank. For clear and easy study the data has
been presented by tables, graphs and have been interpreted using various statistical
and financial methods.

In my project I have introduced the Nepal Bank Ltd and dedicated the first phase for
its general background and applied the methodology to conduct this study. The
second phase of the study is done on collection, presentation, and analysis of data.
This phase also include findings that are calculated through various tools. Finally, in
the third phase I have done conclusion and recommendations that are based on
findings.

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 CHAPTER I
INTRODUCTION

1.1Background of the Study

In general terms, bank is financial institution that collects deposits from the public and
creates credit. It collects deposits from public with idle money paying certain interest
and provides credit to the needy ones for certain interest. Apart from the its basic
function to accept deposits and grant loan, banks also issues cheque, act as an
intermediary for financial transactions, provides locker services and many other
services. In today's economy, banks collects small savings from general people and
lend it for various productive purposes. Bank is a financial institution involved in
credit creation that deals in money and helps in the socio-economic growth of a
nation.

Although, the basic concept is to accept deposit and create credit, various writers have
defined bank in various ways. According to Cambridge English Dictionary (2003),
Bank is "An organization where people and business can invest or borrow money,
change it to foreign money etc or a building where these services are offered."
According to Crowther (2017), "A bank collects money from those who have it to
spare or who are saving it out of their incomes and lend this money to those who
require it." Thus we can say that bank is a financial institution that receives the idle
money in from of deposit, invests and creates credit to the public for certain interest.

1.1.1 Overview of Nepal Bank Limited

Nepal Bank Limited was established under the Nepal Bank Act 1936. Initially, it
operated as the central bank of Nepal until the establishment of Nepal Rastra Bank
(The Central Bank of Nepal) in 1956. NBL is a government-owned bank, with the
Government of Nepal being its major shareholder. The bank operates under the
supervision and regulation of Nepal Rastra Bank. NBL has a wide network of
branches across Nepal, providing banking services to urban as well as rural areas.
This extensive branch network helps in reaching out to a diverse customer base. The
bank offers a comprehensive range of banking products and services including deposit
accounts, loans and advances, trade finance, remittance services, foreign exchange
services, and various other banking facilities. NBL serves a diverse customer base

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comprising individuals, businesses, government entities, and other organizations. Its
services cater to the financial needs of different segments of society. Analyzing the
profitability of NBL involves assessing various financial metrics such as net interest
income, non-interest income, operating expenses, asset quality, return on assets
(ROA), return on equity (ROE), and net profit margins over a specific period. Like
any other financial institution, NBL faces challenges such as competition from other
banks, regulatory compliance, credit risk, and macroeconomic factors. Identifying
these challenges along with opportunities for growth and improvement is crucial for
the profitability analysis. Understanding the regulatory framework governing the
banking sector in Nepal is essential for assessing NBL's profitability. Compliance
with regulatory requirements influences the bank's operations and financial
performance. The adoption of technology and innovation in banking operations is
becoming increasingly important. Assessing NBL's efforts in embracing digital
banking solutions and enhancing customer experience can provide insights into its
future profitability. NBL's initiatives towards CSR and sustainable banking practices
also contribute to its overall performance and reputation in the market.

Table 1.1 Capital Structure of Nepal Bank Limited

Particulars Amount and %
Authorized capital Rs.15 Billion
Paid up capital Rs.14.69 Billion
Nepal Government 51% of paid up capital
Public share 49% of paid up capital

(Source: Nepal Bank Limited, 2080/81)

1.1.2 Statement of the problem

Nepalese commercial banks have faced many difficulties over the years for a
multitude of reasons; the major cause of serious banking problems continue to be
directly related to changes that being due to many political turmoil and changes in
rules and regulations. One such example can be the global financial crisis of 2008 that
is affecting the economy of the country till date. Financial sector which has been
correlated with trading and industry was heavily affected as the investment in the
productive sector kept decreasing due to security and labor problem. Apart from that,
various mergers and acquisitions are being encouraged by NRB to foster the

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consolidation process so reducing the number of banks operating and also changes in
its administration are prevalent.

Banks today are under great pressure to meet the objectives of their stockholders,
employees, depositors and borrowing customers, while somehow keeping government
regulators satisfied that the bank’s policies, loans, investment are sound. An analysis
of the profitability reveals how the profit positions stand as a result of total transaction
made during the year. Such analysis is particularly interesting to suppliers of funds
who can evaluate their investment and take decision accordingly. Profit ratios are
equally beneficial to the management because these ratios reflect the efficiency of the
enterprise as a whole.

Profitability can be analyzed either on the basis of operating profit or net profit. In
operating profit, we generally exclude all non operating items which may be income
or expenditure. On the other hand, in net profit all operating and non operating
income and expenditure are included. To exist in the market, commercial banks have
to maintain certain level of profit. They must make profit out of the responsibilities
assigned so the manager should take the decision very carefully to tackle with the
situations. Various factors create problem to profitability position of the commercial
banks. Monetary policy of the government, strong competition between the banks,
strikes and political situation of the country directly hampers the profitability of the
bank.

The study attempts to evaluate the profitability in respect of Nepal Bank Limited
(NBL). It attempts to know the behavior from Profitability ratios, if the company is
able to generate profit or not. And this study seeks to know if the company’s ratios
have been in increasing or decreasing trend. To point of the basics the study deals
with the following issues:
i. Do profitability ratios show any behavior?
ii. Whether or not NBL is able to generate profit?
iii. Do profitability ratios vary widely from year to year in books of NBL?
iv. Do the ratios have increasing or decreasing trend?

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1.2 Purpose of the study
The purpose of conducting the summer project is partial fulfillment of the requirement
for the completion of Bachelor of Business Administration (BBA) which includes the
following:
 To examine overall financial performance condition of the bank.
 To examine the relationship of profitability with its determinants.
 To analyze the trend of profitability of selected commercial bank.

1.3 Significance of the study

The significance of conducting a profitability analysis of Nepal Bank Limited lies in
its potential to offer valuable insights for both the bank itself and stakeholders. By
closely examining the bank's financial performance, this study can identify strengths
and weaknesses in its operations, guiding strategic decision-making for enhancing
profitability. Moreover, it can provide benchmarks for comparison with industry
standards and competitors, aiding in the formulation of competitive strategies.
Additionally, findings from this analysis can inform policymakers and regulators
about the overall health of the banking sector in Nepal, contributing to efforts aimed
at fostering financial stability and sustainable economic growth. Ultimately, the
study's outcomes can serve as a foundation for improving the efficiency and
effectiveness of Nepal Bank Limited's operations, thus fostering its long-term success
and contributing to the broader financial ecosystem of the country.

1.4 Limitations of the study

Given the study's emphasis on meeting the requirements for the BBA course at T.U.,
it is essential to acknowledge the limitations that may arise due to the reliability of
different statistical methodologies and the researchers' limited experience in
conducting such investigations. Furthermore, the study must proceed despite the
constraints posed by time and resource limitations.
 The study covers five year period from the fiscal year 2075/76 to 2079/80.
 Focus only on profitability part i.e. ROA and ROE.
 The study only covered one commercial bank i.e. Nepal Bank Limited.
 In this study NRB is taken as an authentic source of data.
 Study limit on banking sector only.

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1.5 Literature survey
A literature review in the research field is a critical analysis and synthesis of existing
literature relevant to a particular topic or research question. It involves identifying,
evaluating, and synthesizing scholarly sources such as books, journal articles, and
conference proceedings to provide a comprehensive understanding of the topic under
investigation. Literature reviews serve as the foundation for a research study by
situating it within the context of existing knowledge and identifying gaps that the
study aims to address.

It is a way to discover what other research in the area of the research topic has
uncovered. It helps the researcher to develop a thorough understanding and insight
into previous research works that relates to the study. It is also a way to avoid
investigating problems that have already been definitely answered. The purposes of
Literature Review are listed below:
 To avoid needless duplication of work.
 To explain historical background of a topic.
 To describe and compare the schools of thought on an issue.
 To highlight and critique research methods.
 To note areas of disagreement.
This report uses two types of review. They are:-

1.5.1 Conceptual review

Profitability analysis is a financial evaluation process aimed at assessing the ability of
a business or investment to generate profits over a specific period. It involves
analyzing various financial metrics, including revenue, costs, margins, and return on
investment (ROI), to determine the efficiency and effectiveness of an organization's
operations. The concept revolves around identifying the sources of profitability,
understanding the factors influencing profitability fluctuations, and making strategic
decisions to optimize profitability. Through comparative analysis, trend analysis, and
benchmarking against industry standards, profitability analysis provides insights that
enable businesses to enhance performance, allocate resources effectively, and
maximize returns for stakeholders.
Profitability analysis can be done using various financial ratios. And such various
financial ratios can be calculated through accounting data contained from financial
statements. The ratios can be categorized into four groups, which are as follows:

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 a) Liquidity ratio
b) Leverage ratio
c) Activity ratio
d) Profitability ratio

Profitability
Profitability refers to its ability to generate more revenue than expenses over a
specific period, typically measured in terms of financial quarters or years. It's a
fundamental indicator of an organization's financial health and sustainability.
Profitability is determined by subtracting total expenses from total revenue, resulting
in net income or profit. This metric is essential for assessing the effectiveness of an
institution's business model, operational efficiency, and overall performance. High
profitability indicates that an institution is efficiently utilizing its resources, managing
costs effectively, and generating sufficient returns to meet its financial obligations and
provide value to its stakeholders, including shareholders, employees, and customers.
Conversely, low profitability may signal inefficiencies, financial challenges, or
inadequate revenue generation relative to costs. Thus, maximizing profitability is a
primary objective for institutions across various sectors, driving strategic decision-
making, investment priorities, and operational improvements.

Profitability ratios related to Investments

i. Return on Equity
Return on equity (ROE) is a fundamental financial metric that measures a
company's profitability in relation to its shareholders' equity. It provides insight
into how effectively a company is utilizing its equity to generate profits. ROE is
calculated by dividing net income by shareholders' equity and is expressed as a
percentage. This metric is crucial for investors and analysts as it indicates the
efficiency of a company in generating profits from its equity investments. A
higher ROE typically signifies better performance and can be indicative of strong
management and operational efficiency.
Net income
Return on equity =
Shareholder ' s equity

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 ii. Return on Assets
Return on assets (ROA) is a key financial ratio used to assess a company's
efficiency in generating profits from its assets. It measures the ability of a
company to generate earnings relative to its total assets. ROA is calculated by
dividing net income by average total assets and is typically expressed as a
percentage. This metric provides insight into how effectively management is
utilizing the company's assets to generate profit. A higher ROA indicates better
efficiency in utilizing assets to generate profits, which is often a sign of strong
financial management and operational performance.

Net income
Return on assets =
Total assets

Profitability ratios in terms of Shareholders

i. Earnings per shares

Earnings per share (EPS) are a fundamental financial metric used to measure a
company's profitability and performance on a per-share basis. It represents the
portion of a company's profit allocated to each outstanding share of common
stock. EPS is calculated by dividing the net income attributable to common
shareholders by the average number of outstanding shares during a specific
period. The resulting number serves as an indicator of a company's profitability.
This metric is essential for investors as it provides insight into a company's ability
to generate profits and distribute earnings to its shareholders. A higher EPS
indicates higher profitability per share, which is generally favorable for investors.
EPS is widely used in financial analysis, valuation models, and investment
decision-making processes.

Net income
Earnings per share =
Number of o/ s shares

ii. Market price per share:

Market price per share refers to the current price at which a single share of
a company's stock is being traded on the open market. It represents the
valuation of the company as determined by investors based on various
factors such as earnings, growth potential, industry conditions, and overall

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 market sentiment. Market price per share is influenced by supply and
demand dynamics, with buyers and sellers determining the price through
their transactions on stock exchanges. This metric is crucial for investors
as it reflects the perceived value of owning a share of the company at a
given point in time. Changes in market price per share can indicate shifts
in investor sentiment and expectations regarding the company's
performance and future prospects.

iii. Dividend payout ratio

The dividend payout ratio is a financial metric that measures the proportion of a
company's earnings paid out to shareholders in the form of dividends. It is
calculated by dividing the total dividends paid by the net income of the company.
A higher dividend payout ratio suggests that the company is returning a larger
portion of its profits to shareholders, while a lower ratio indicates that the
company is retaining more earnings for growth or other purposes. This ratio is
important for investors seeking income from their investments and for evaluating
a company's dividend policy and financial health.

iv. P/E ratio

The price-to-earnings (P/E) ratio is a widely used financial metric that compares a
company's current market price per share to its earnings per share (EPS). It is
calculated by dividing the market price per share by the earnings per share. The
P/E ratio provides insight into how much investors are willing to pay for each
dollar of a company's earnings. A high P/E ratio typically indicates that investors
are willing to pay a premium for the company's earnings, possibly due to
expectations of future growth or strong market sentiment. Conversely, a low P/E
ratio may suggest that the company's stock is undervalued or that investors have
lower expectations for future earnings growth. The P/E ratio is commonly used by
investors to assess the valuation of a company's stock relative to its earnings and
to compare it with other companies in the same industry or the broader market.
Market price per share
P/E ratio =
Earnings per share

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Profitability ratios in relation to income
i. Net profit margin
The net profit margin is a key financial ratio that measures the profitability of a
company by expressing its net profit as a percentage of its total revenue. It is
calculated by dividing net profit (after deducting all expenses, including taxes and
interest) by total revenue and multiplying the result by 100 to express it as a
percentage. The net profit margin indicates how efficiently a company is able to
convert its revenue into profit. A higher net profit margin suggests that a company
is able to generate more profit from its operations, while a lower margin may
indicate lower efficiency or higher expenses relative to revenue. This metric is
crucial for investors and analysts as it provides insight into a company's
profitability and operational efficiency, helping to assess its financial health and
performance compared to competitors or industry benchmarks.

Net profit
Net profit margin =
Total revenue

1.5.2 Review of previous works

Several different studies have been carried out in the area of profitability analysis of
commercial banks in Nepal as well as other countries. Some of the most prominent of
similar nature is reviewed as follows:

(Perera, 2013) on his research "Determinants of profitability of commercial banks in

Sri Lanka" mentioned that the performance of the Sri Lankan commercial banks,
measured by the Return on Assets (ROA) and the Return on Equity (ROE) ratios,
appeared to be stronger in the recent past compared to the other SARRC countries.
This study investigates the influence of bank-specific and macroeconomic factors on
the profitability of commercial banks in Sri Lanka using quarterly data from 2001 to
2011 through multiple panel regression analysis. The findings indicate that larger
banks exhibit greater profitability attributed to economies of scale compared to well-
capitalized banks. Moreover, liquidity and operational cost efficiency demonstrate a
negative association with commercial bank profitability in Sri Lanka. Additionally,
interest rates exert a significant negative impact on bank profitability, suggesting that
lower interest rates contribute to higher profitability through increased banking
activity. These insights contribute to a deeper understanding of the determinants of

9
commercial bank profitability in Sri Lanka, corroborating previous research findings
while providing new perspectives, particularly regarding capital adequacy ratios. The
study's consideration of both bank-specific and macroeconomic determinants enriches
the understanding of bank profitability across various dimensions. Importantly, the
analysis spans the years 2001 to 2011, capturing a recent period marked by notable
changes in the banking sector and the broader economy of the country.

(Islam, Sarker and Rahman, 2017) conducted a research on the topic of "Determinants
of profitability of commercial banks in Bangladesh", and published a research article
paper. The research delved into the determinants of profitability within the private
commercial banking sector of Bangladesh during the years 2014 and 2015. Utilizing
annual data from all 11 private commercial banks in Bangladesh for the
aforementioned years, the study conducted multiple regression analyses to identify
significant profitability drivers and assess hypotheses. Results revealed that while
asset size and Net Interest Margin ratio did not exhibit a notable impact on
profitability, non-performing loans to total loans (NPL) emerged as the most
influential variable affecting profitability. Moreover, investment activities,
particularly in shares and debentures of private sectors, demonstrated a positive
influence on return on equity (ROE). The study also highlighted the profitability-
enhancing effect of diversified banking activities, albeit with a caveat regarding the
potential increase in risk associated with higher proportions of volatile trading
activities. Policy directives should thus prioritize measures aimed at fortifying the
resilience and efficiency of financial institutions, ultimately bolstering the robustness
and stability of the banking sector.

(Neupane, 2020) on his research article "Profitability Determinants of Nepalese

Commercial Banks" published on Press Academia Procedia (PAP). The aim of this
study is to investigate the main determinants of profitability for commercial banks in
Nepal. To achieve this, the study uses descriptive statistics to describe the profitability
of the banks and their determinants. Additionally, the correlation coefficient is
calculated to assess the degree of correlation among different indicators of
profitability and their determinants. Finally, a panel data regression model (Fixed
Effect Model and Random Effect Model) is used to explore the determinants and their
impact on the profitability of Nepalese commercial banks. The findings indicate that

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the profitability of Nepalese commercial banks, as measured by ROA, is significantly
influenced by external factors such as concentration ratio, banking sector
development, GDP growth, inflation, and exchange rate in opposite directions.
However, internal factors like bank size, capital base, deposit, loan, off-balance sheet
activities and number of branches do not significantly affect bank profitability.
Another indicator of bank profitability, the Net Interest Margin (NIM), is significantly
affected only by capital adequacy, the absolute number of branches, and inflation rate.
In conclusion, the study shows that external factors, especially industry-specific
factors, have a significant impact on the profitability of Nepalese commercial banks
as measured by return on assets. On the other hand, macroeconomic variables have a
weak but significant impact on bank profitability. The profitability measured by NIM
is significantly influenced only by capital adequacy, absolute number of branches, and
annual inflation rate.

(Mishra, Kandel, and Aithal, 2021) conducted analytical business research on the
topic of "Profitability in Commercial Bank-A Case from Nepal". The researchers
noted that banking in Nepal is currently being organized into a system. In order to
develop Nepal, foreign aid is seen as a key component. The objective of this study
was to evaluate the impact, contribution, and correlation of bank size, loans and
deposits, inflation, and capital on the profitability of banks. The researchers collected
secondary data from seven commercial banks from 2013 to 2019, along with primary
data from surveys. Correlation and regression analysis, along with ratio analysis, were
used to determine the relationship among return on assets (ROA), return on equity
(ROE), and net interest margin (NIM). The study found that the size of banks is
increasing over time. The decreasing trend of standard deviation showed that the size
of Nepalese commercial banks has lower variation in the use of total assets as the year
increases. The research also revealed that there is a negative relationship between
ROA and ROE with loan ratio, deposit ratio, and capital ratio, while there is a positive
relationship between bank size and inflation. However, in the case of NIM, bank size,
loan ratio, deposit ratio, and inflation exhibit a positive relationship, while the capital
ratio shows a negative relationship with NIM. Additionally, most respondents feel
that the publication of financial reports is one of the main factors influencing bank
profitability.

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(Rai, 2021), conducted a research on the topic of 'Comparative Study on Profitability
of Nabil Bank and Nepal SBI Bank Limited'. The researchers noted that profitability
is a vital indicator that signifies the efficient functioning of an enterprise. It shows
how well the management can utilize all available resources in the market to generate
profits. The main objective of this study is to determine the profitability status of two
joint venture banks, NABIL Bank and Nepal SBI Bank Ltd. These two banks were
chosen as samples by using convenient sampling. Data was collected from financial
statements of both banks for a year from F/Y 2070-71 to 207677. The variables used
to measure the profitability were ROA and ROE as dependent variables, and the
independent variables included operating expenses, liquidity, bank size, capital, etc.
Descriptive and analytical research designs were applied to analyze the collected data.
The study revealed that the average operating profit margin, net profit margin, ROA,
and ROE ratios of NABIL Bank were higher than those of Nepal SBI Bank Ltd.
Based on the average return; the study concluded that NABIL Bank's profitability
performance is better than Nepal SBI Bank's. However, Nepal SBI Bank is a good
performer as it has the lowest CV, more consistency, and low variation. The study
also found that the independent variables are negatively and positively related to bank
profitability (ROA, ROE). ROA is positively related to liquidity and capital but
negatively related to operating expenses and banks. ROE is negatively related to
operating expenses, bank size, and capital. There is a positive effect of liquidity on
ROE. The study recommends that Nepal SBI Bank should control the cost and
expenses associated with bank operations to increase profit. NABIL Bank should
increase its cash and bank balance to fulfill its depositors' demands and create new
investment opportunities.

(Gurung and Gurung, 2022) conducted a research study on the topic of "Factors
Determining Profitability of Commercial Banks: Evidence from Nepali Banking
Sector". The objective of this study was to observe the various aspects that shape the
profitability of commercial banks in Nepal. For this, bank-related and external
macroeconomic variables that influence bank profitability were taken into account.
The research used a set of balanced panel data that contained 13 Nepali commercial
banks for 12 years (2009-2020) with 156 observations for analysis. Descriptive
statistics and Pearson's correlation analysis were employed to measure the status and
explore the relationship between independent and dependent variables under study.

12
The study findings were drawn using fixed-effect panel regressions. The study
revealed that loan-to-deposit, known as the credit-deposit ratio, has a significant
positive impact on the return on assets and net interest margin of commercial banks.
The growth of economic activities of the nation, measured by gross domestic product
growth, significantly influences profits. This suggests that an increase in the nation's
economic activities leads to an escalation in the size of loans and advances, and
eventually earnings of the banks. However, non-performing assets have a weak
influence on the return on assets, but it has a significant negative effect on the equity
return. These outcomes suggested that commercial bank profitability can be increased
by extending the degree of loan and advance relative to deposit and economic
activities of the nation and decreasing non-performing assets.

(Bhatt, 2022) conducted a study on the profitability analysis of commercial banks in

Nepal. In his study, he highlighted that commercial banks aim to maximize profit to
survive and compete in a competitive business environment in the long run. The study
analyzed the profitability of five selected commercial banks in Nepal, covering the
period from 2016/17 to 2020/21. The data were collected from the annual reports of
the selected commercial banks. The researcher used various tools such as trend
analysis, descriptive analysis, correlations, and regression analysis to investigate the
profitability. The dependent variable was profit, while the independent variables were
bank capital, deposit, lending, size, and capital adequacy ratio (CAR). The study
found a positive relationship between return on assets (ROA) with bank deposits (BD)
and CAR, while there was a negative relationship with bank capital (BC), bank
lending (BL), and bank size (BS). Moreover, the return on equity (ROE) had a
negative relationship with BC, BL, BS, and CAR, but a positive relationship with BD.
The findings indicated that the profit of Nepalese commercial banks was highly
influenced by the bank's capital, deposit, lending, size, and capital adequacy ratio.

1.6 Research methodology

The research process involves a set of well-planned activities that include collecting
data and determining the sources used to obtain that data. This process, known as
research methodology, includes analyzing and interpreting the data to find a solution
to a problem or answer a question. Research is undertaken to contribute to the general

13
body of knowledge in a particular area of interest to the researcher, not just to solve
problems in a work setting.

(Michael, 2000) defines research as a systematic and in-depth study or search for a
particular topic or subject backed by the collection, presentation, and interpretation of
relevant data.

1.6.1 Research design

A research design serves as a comprehensive blueprint outlining the methodology and
procedures of an investigation. It encompasses the strategies for data collection, the
selection and application of tools and techniques, as well as the methods for data
analysis. In this study, a combination of financial and statistical tools has been
employed to enhance the efficacy of the collected data and to assess the profitability
positions of both banks under scrutiny. To fulfill the study's objectives, a dual
approach comprising descriptive and analytical research designs has been adopted.
The descriptive research design serves the purpose of gathering factual information
and seeking adequate insights. It functions akin to a survey, enabling the assessment
of opinions, behaviors, and characteristics within a specific population, while also
providing a detailed depiction of the prevailing circumstances and events.

1.6.2 Population and sample

Population, in research, refers to the complete group of individuals, events, or objects
that share a well-defined characteristic. It is the total number of people, events, or
things that a researcher wants to study. Due to time constraints, it is often impractical
to collect data from every member of the population. Hence, a sample of the
population is taken for simplicity.

In research, the representative subset of the population is referred to as the sample.

Sampling involves the deliberate selection of an adequate number of elements from
the population to enable the study of the sample's characteristics and subsequent
generalization of these traits to the entire population. In the context of this study on
the profitability analysis of commercial banks in Nepal, all 20 commercial banks are
considered the population. Utilizing the random sampling technique, Nepal Bank
Limited (NBL) has been chosen as the sample for comprehensive examination.

14
1.6.3 Nature and sources of data
Data is the building block of any research. Data can be defined as the values
collections through record-keeping or polling, observing, or measuring. More simply,
data is facts, text, or numbers that can be collected. Here, data should not be thought
of only as statistical or quantitative. It may take many other forms, such as transcripts
of interviews, maps, photographs, and videotapes of social interaction.

Secondary data
Data which are not originally collected rather obtained from different published and
unpublished sources are called secondary data. The study basically focuses on the
secondary data. The secondary data are taken from annual reports, auditor’s reports,
balance sheet, profit & loss account, respective website, unpublished / published
thesis, newspapers, journals, articles, magazines etc. Internet and reports from NRB
has been also used for the purpose of this study.

1.6.4 Data collection procedure

This research uses a variety of data sources such as banks' reports, financial
performance records, articles, journals, references, annual reports, and their websites.
It also gathers information from economic journals, periodicals, bulletins, and other
documents from different places to ensure all necessary observations are covered.

1.6.5 Tools for data analysis

Under this study, various tools and techniques are used to measure profitability, and
data is analyzed and presented through financial and statistical tools such as ratio
analysis.

Financial tools
One of the most common and effective financial tools is ratio analysis. Ratios
compare different numbers in financial statements. They show the connection
between two accounting figures using math. Ratios are vital for summarizing lots of
financial data and making informed decisions about a business's performance. They're
considered the best indicators for understanding how well a business is doing. There
are many ratios to help assess a company's financial health. However, for our purpose,

15
only important and relevant ratios are evaluated. Some of the important ratios for
evaluating the company’s profitability are:

a) Return on Assets
b) Return on Equity
c) Price to Earnings Ratio
d) Dividend Payout Ratio

16
 CHAPTER II
DATA PRESENTATION AND ANALYSIS
2.1 Organization profile
Nepal Bank Limited (NBL), the first bank of Nepal proudly holds the glory of
marking the formal beginning of banking system in Nepal. Nepal Bank Limited was
established as FIRST bank of Nepal on Kartik 30, 1994 (November 15, 1937 A.D.)
under Nepal Bank Act 1937. The bank was established with an authorized capital of
Rs.10 million, issued capital of Rs.2.5 million and paid up capital of Rs.0.842 million.
In its earlier days, the shares held by the government and private sector was 40
percent and 60 percent, respectively. Today, Nepal government holds 51 percent of
the total outstanding share capital, making it the majority shareholder of the bank.

Absence of any bank in Nepal was hampering the economic progress of the country.
This was taken into consideration by Nepal Bank Limited with key focus on
overcoming such economic hamper and difficulties of general public. This was
initiated by providing banking services to people removing their inconvenience. This
objective got better and bigger with the time. Nepal Bank Limited has so far adopted
according to the technological changes, national economic welfare, customer
preferences in services, market competition and global financial scenarios to become
a leading, glorious and highly reputed bank of Nepal.

Key players
CEO: Mr. Tilak Raj Pandeya is the CEO of the bank.
Chairman: Dr. Chandra Bahadur Adhikari is the Chairman of the Board of Directors
of NBL.

Corporate vision
To be the most preferred bank of the Nation with complete banking solutions.

Mission statement
Nepal Bank collaborates with its customers while designing, developing, and
delivering banking solutions to satisfy the interest of all stakeholders by efficiently
leveraging cutting-edge technology. The bank endeavors to be ethical in product
offering, responsive in operation, and trustworthy in ensuring security to protect its
own and customers' interests.

17
Value statement
The followings are the core values (BREED) of the bank:

B: Behave with dignity and respect

R: Responsible
E: Ethical
E: Empower employees
D: Devote for innovations

Goal
In line with the Vision and Mission Statements, the bank's goal is "To Achieve
secured and sustainable business growth to attain larger market share" through
enhancing Operational Efficiency and Customer Service, Increasing HR Productivity,
and Risk Management System.

2.2 Data presentation

Data is a collection of facts that only provides a partial view of reality. Researchers
have access to most data in its raw form, and they must summarize, organize, and
analyze it carefully to derive meaningful information. How the data is presented is
crucial because each data set needs to be presented in a specific way depending on its
intended use. Therefore, planning how the data will be presented is essential before
processing the raw data appropriately. If the information derived from the raw data is
not presented in an effective format, the data fails to convey the information to the
readers and reviewers. There are three techniques of data and information
presentation: textual, tabular, and graphical forms. Text is the principal method of
explaining findings, outlining trends, and providing contextual information. A table is
best suited for representing individual information and can represent both qualitative
and quantitative information. A graph is a very effective visual tool because it
displays data at a glance, facilitates comparison, and can reveal trends and
relationships within the data such as data changes over time, frequency distribution,
and correlation or relative share of a whole.

18
2.3 Data analysis
Data analysis is a methodical process of using statistical and logical techniques to
describe, illustrate, and evaluate data. In simple terms, it involves examining datasets
to extract the information they contain, often with the help of specialized software
systems. The basic steps in the analysis process include identifying the issues,
determining the availability of suitable data, selecting appropriate methods to answer
the questions of interest, applying these methods, and finally, evaluating,
summarizing and communicating the results. In this chapter, we will take raw data
collected from various sources and process it into a presentation that is easy to
understand. We will use financial and statistical tools supported by diagrams and
graphs to present our findings.

Secondary data analysis

It is possible that there may be inconsistency in the activities of a bank across
different fiscal years. Such inconsistencies occur due to changes in the national and
global economy. In this chapter, we have compared the earnings of different years to
examine the profitability of Sunrise Bank. To analyze the bank's data, various raw
data have been collected and presented in a tabular form. Therefore, it is important to
analyze the data to understand the bank's profitability.

This section provides interpretation and analysis of secondary data. Thus, this section
is exclusively devoted for the analysis of profitability, especially profitability position
of Nepal Bank Limited, trend analysis of market price per share and earning per share,
and overall profitability of bank with other variables. For doing such presentation
financial tools i.e. ratio analysis, statistical tools such as bar diagram, graphs are used.

2.3.1 Profitability position of Nepal Bank Ltd

Profitability is the end result of various policies and decisions that a bank makes. In
order to survive and prosper over a long period, a bank must generate profits. The
bank's ability to provide satisfactory returns to its shareholders and maintain its
operational efficiency ultimately depends on its profitability. Therefore, profitability
analysis is a technique employed to assess the effectiveness of a bank.

19
In order to find out the profitability position of Nepal Bank Ltd., the changing
percentage of total income and expenses and the resulting net profits have been
summarized in the table below:

Table 2.1 Profitability of Nepal Bank Ltd

(Rs. in millions)
Fiscal Year Net profit Increase/Decrease (%)
2075/76 2611.9 -30.16
2076/77 2556.4 -2.12
2077/78 3065.5 19.91
2078/79 3266.1 6.54
2079/80 3411.5 4.45

(Annual Report of NBL 2075-2080)

In the Table 2.1, we can see that the net profit of Nepal Bank Limited is in increasing
trend since FY 2076/77 to 2079/80. In the FY 2075/76 and 2076/77, net profit of the
bank decreased by 30.16% and 2.12% respectively. The highest increase in net profit
is recorded in FY 2077/78 i.e. by 19.91% and the highest decline in profit was in FY
2075/76 i.e. by 30.16%. Despite the ups and downs, the net profit of Sunrise Bank
Limited is in increasing trend. The Table 2.1 can be presented by following figure:

Figure 2.1 Profitability of Nepal Bank Ltd

20
2.3.2 Profitability Ratios of Nepal Bank Limited

The following are the ratios of profitability of Sunrise bank Limited:

In relation to investment

i. Return on Equity
It is the ratio of net income to shareholders’ equity. It measures the rate of
return on common stockholders’ investment. It shows how effectively the
bank has utilized the owners’ fund. Return on shareholders’ equity is
calculated dividing net profit after taxes by shareholders’ equity.

Table 2.2 Return on equity of Nepal Bank Ltd

(Rs. in millions)
Fiscal Year Net Profit Shareholder's equity ROE (%)
2075/76 2611.9 29437.9 8.87
2076/77 2556.4 30182 8.47
2077/78 3065.5 33258.7 9.22
2078/79 3266.1 35786.5 9.13
2079/80 3411.5 36578.9 9.33

(Annual Report of NBL 2075-2080)

From the Table 2.2, we can say that the return on shareholder’s equity of Nepal Bank
Limited is in increasing trend. ROE in F/Y 2075/76 is 8.87% and the year later is
8.47%. It shows the few percentage decrease in return on equity. The ratio reached all
time high in F/Y 2079/80 by 9.33%. Despite the decrease in F/Y 2078/79, the bank
succeeded to increase its ROE in the later year and maintained the increasing trend.

The Table 2.2 can be presented by following figure:

21
 9.4

9.2

8.8
ROE

8.6 ROE (%)

8.4

8.2

8
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

Figure2.2: Return on equity of Nepal Bank Ltd

ii. Return on Assets

The ratio of net income to total assets measures the return on total assets
(ROA) after interest and taxes. The total profit earned on the assets of the
bank is known as return on assets. It measures the productivity of the
bank’s assets. It conveys information on how well the bank’s resources are
being used in order to generate income. More efficiently-run banks tend to
have higher ROA.

Table 2.3 Return on Assets of Nepal Bank Ltd

(Rs. in millions)
Fiscal Year Net Profit Total Assets ROA (%)
2075/76 2611.9 165911.4 1.57
2076/77 2556.4 190426.6 1.34
2077/78 3065.5 222617.3 1.38
2078/79 3266.1 259502.4 1.26
2079/80 3411.5 296098.2 1.15

(Annual Report of NBL 2075-2080)

22
From the Table 2.3, we can say that the return on assets of Nepal Bank Limited is in
decreasing trend. Return on total assets was 1.57% in the FY 2075/76 while in the FY
2076/77, it was 1.34%. It shows decrease in ROA from the previous year. In the FY
2077/78, ROA slightly increased to 1.38%, thereby continuously falling to 1.26% and
1.15% in the FY 2078/79 and FY 2079/80 respectively.

The Table 2.3 can be presented by following figure:

1.8

1.6

1.4

1.2

1
ROA

0.8
ROA(%)
0.6

0.4

0.2

0
2075/76 2076/77 2077/78 2078/79 2079/80

Fiscal Year

Figure 2.3 Returns on Total Assets of NBL

In relation to shareholders

i. Earnings per share (EPS)

Earnings per share (EPS) are the income of per common stock. It is the
ratio which measures the earnings available to the equity shareholders on a
per share basis. It is the ratio of earnings available to equity shareholders
to total number of common stock outstanding.

ii. Market price per share (MPS)

Market price per share (MPS) is the closing price of stock in the stock
exchange. It gives management an indication of what investors think of the
company’s past performance and future prospects.

23
 Table 2.4 EPS and MPS

(Amount in Rs.)
Fiscal Year EPS MPS
2075/76 26.99 336
2076/77 20.68 249
2077/78 23.43 443
2078/79 20.29 298
2079/80 23.39 249

(Annual Report of NBL 2075-2080)

From the Table 2.4, we can say that both EPS and MPS of the bank are fluctuating
over the years. In FY 2075/76, EPS and MPS are Rs 26.99 and Rs 336 respectively.
Next FY both EPS and MPS are decreased to Rs 20.68 and Rs 249 respectively. The
highest EPS of Rs 26.99 in FY 2075/76 and lowest EPS of Rs 20.29 in FY 2078/79.
In FY 2077/78, MPS is in highest point i.e. Rs 443 and lowest point is Rs 249 in FY
2076/77.

The Table2.4 can be presented by following figure:

500
450
400
350
EPS and MPS

300
250
MPS
200 EPS
150
100
50
0
2075/76 2076/77 2077/78 2078/79 2079/80

Fiscal Year

Figure 2.4 EPS and MPS of NBL

24
 iii. Dividend payout ratio (DPR)
The dividend payout ratio is the total amount of dividends that a company
pays to shareholders relative to its net income. Put simply, this ratio is the
percentage of earnings paid to shareholders via dividends. This ratio
provides an indication of how much money a company is returning to its
shareholders versus how much it retains from the earning.

iv. Price to earnings ratio (P/E)

The price-to-earnings (P/E) ratio is a financial metric that measures the
relationship between a company's stock price and its earnings per share
(EPS). This ratio, also known as the price or earnings multiple, is useful
for evaluating the value of a company's stock. The price earnings ratio
indicates the expectation of equity investors about the earning of the firm.
It relates earnings to market per share. It can be used to compare a
company's current valuation with its past performance, other companies in
the same industry, or the overall market.

Table 2.5 DPR and P/E ratio

Fiscal Year DPR (%) P/E ratio

2075/76 10 12.45
2076/77 4 12.04
2077/78 3 18.9
2078/79 10 13.21
2079/80 0 10.64

(Annual Report of NBL 2075-2080)

From the Table 4.6, we can see that dividend payout ratio and price earnings ratio
both are in fluctuating trend. Dividend payout ratio is in decreasing trend till FY
2077/78. After that DPR increases to 10% in FY 2078/79 and then goes at nil in FY
2079/80. On the other hand, P/E ratio is 12.45 in FY 2075/76 and it declines to 12.04
in next FY. After that P/E ratio is increased to 18.9 in FY 2077/78 and then it declines
continuously.
The Table 2.5 can be presented by following figure:

25
 20
18
16
DPR and P/E ratio

14
12
10 DPR(%)
P/E ratio
8
6
4
2
0
2075/76 2076/77 2077/78 2078/79 2079/80

Fiscal Year

Figure 2.5 DPR and P/E ratio of NBL

In relation to income
i. Net profit margin
The net profit margin is a crucial metric that evaluates the efficiency of a
company's revenue generation. It quantifies the proportion of net income
relative to total revenue, providing investors with insights into the
effectiveness of management in capitalizing on sales opportunities.
Additionally, it serves as an indicator of the company's ability to manage
operational and overhead expenses effectively.

Table 2.6 Net profit margin

Fiscal Year Net profit margin (%)
2075/76 21.51
2076/77 17.34
2077/78 21.23
2078/79 16.15
2079/80 20.21

(Annual Report of NBL 2075-2080)

26
From Table 2.6, we can see that the net profit margin in fluctuating trend. In 2075/76,
the net profit margin was 21.51%, indicating that the company retained approximately
21.51% of its total revenue as profit after accounting for all expenses and taxes. In
2076/77, the net profit margin decreased to 17.34%, suggesting a decrease in
profitability compared to the previous year. However, in 2077/78, there was a slight
improvement as the net profit margin rose to 21.23%, indicating that the company
managed to increase its profitability. The trend reversed in 2078/79, with the net
profit margin dropping to 16.15%, indicating a decrease in profitability compared to
the previous fiscal year. Finally, in 2079/80, there was a recovery in profitability, with
the net profit margin increasing to 20.21%.

Overall, these fluctuations in net profit margins suggest variations in the company's
financial performance over the specified period. Factors such as changes in revenue,
operating expenses, market conditions, and strategic decisions may have influenced
these fluctuations.

The Table 2.6 can be presented by following figure:

25

20

15
Net Profit Margin

10 Net Profit Margin(%)

0
2075/76 2076/77 2077/78 2078/79 2079/80
Fiscal Year

Figure 2.6 Net profit margin of NBL

27
2.4 Findings and discussion
The foregoing analysis of profitability ratios of Nepal Bank Limited reveals the
following findings:
2.4.1 Findings
 During the period spanning from 2075/76 to 2079/80, the bank maintained a
favorable financial performance, indicating a sound profitability position.
 Net income of the bank has an increasing trend despite the fall in income in

the FY 2075/76 and FY 2076/77.

 ROE is on rising trend it increases from 9.13% to 9.33% during period
2078/79 to 2079/80 which means bank is trying to make effective utilization
of owners’ capital. The ROE of the bank has fallen in the fiscal year 2076/77
and 2078/79. But the bank has done a very good comeback in the later year
with a ROE of 9.22% and 9.33% respectively.
 ROA is in decreasing trend from the last five years. It is 1.57% in the initial
year. It increased during fiscal year 2077/78 and then declines over the years.
 Despite in fiscal year 2077/78 (i.e. RS 443), MPS of the bank has been
decreasing and EPS of the bank is fluctuating.
 DPR and P/E ratio both are in fluctuating trend. DPR is decreasing up to
fiscal year 2077/78. Next year it goes up to 10% and then went to nil at later
year whereas P/E ratio has exactly opposite behavior. Latter P/E ratio decrease
up to 10.64 in fiscal year 2079/80.
 Net profit margin of the bank has a fluctuating trend in the given five fiscal

years. Overall, these fluctuations in net profit margins suggest variations in the
company's financial performance over the specified period.
2.4.2 Discussion
This research attempts to analyze the profitability position of selected commercial
bank i.e. Nepal Bank Limited (NBL). This study shows the profitability ratios of the
bank are in fluctuating trend however ROE is in increasing trend and ROA is in
decreasing trend.
(Perera, 2013) concluded that the ROE and ROA ratios of Sri Lankan commercial
banks appeared to be stronger in the recent past compared to the other SAARC
countries. This study shows that ROE of bank is in stronger position but ROA is in
weak position that means decreasing trend.

28
29
 CHAPTER III
CONCLUSION AND ACTION IMPLICATIONS

3.1 Conclusion
The report reveals some important information about the financial aspect of the bank
from the year 2075/76 till the date 2079/80. The main feature of the study is to get
actual knowledge about the position of Nepal Bank Limited (NBL).The research
study of profitability analysis of NBL, employing various financial tools and
methodologies for analysis. Specifically, profitability ratios were utilized to display
the financial health of the firms, providing insights into their operational efficiency.
These ratios served as valuable metrics for assessing the effectiveness of the banks'
operational strategies and financial performance. It examines the ROE and ROA of
NBL.

The previous research by (Perera, 2013) concluded that the performance of the
commercial banks, measured by the Return on Assets (ROA) and the Return on
Equity (ROE) ratios. This means that if a bank's financial ratios, such as ROE and
ROA, are increasing, then the bank is in a profitable position.

Under this study following consideration could be made.

 The bank has a positive change in its profitability position; this assessment
suggests that the bank's operations, revenue generation, and management
strategies were effective in achieving consistent profitability over the specified
timeframe. Such stability and strength in profitability underscore the bank's
ability to navigate economic challenges and capitalize on opportunities,
positioning it as a reliable and resilient financial institution.
 The fact that the bank's net profit keeps going up means it's doing well
financially. It shows the bank is making more money and likely managing its
expenses smartly. This steady increase suggests the bank is strong and making
good decisions that benefit its customers and investors. We can say that the
bank has invested in quite profitable sectors.
 ROE is on rising trend, which means bank is trying to make effective
utilization of owners’ capital.

30
  ROA is in decreasing trend from the last five years which indicates total assets
are not properly utilized.
 MPS of the bank has been decreasing because of its poor performance in the
market and EPS of the bank is fluctuating due to change in number of shares.
 DPR and P/E ratio both are in fluctuating trend due to change in income of the
bank during the year and the bank fails to implement effective policies.
 Net profit margin of the bank has a fluctuating trend in the given five fiscal
years. Factors such as changes in revenue, operating expenses, market
conditions, and strategic decisions may have influenced these fluctuations.

3.2 Action implications

On the basis of analysis and findings the following possible implications can be made:

 The bank may consider reinvesting a portion of its increased profits into areas
such as technology upgrades, expansion of services, or marketing efforts to
sustain and potentially accelerate this positive trend.
 Despite the positive trend, the bank should remain vigilant about managing
risks associated with increased profitability, such as ensuring sufficient
liquidity, maintaining asset quality, and managing operational risks. So, the
bank must be aware about risk associated with profitability.
 An increasing ROE signals improved profitability and efficiency. Therefore
bank always be focused on attracting investors.
 Recognizing the role of employees in driving ROE improvement, the bank
may implement incentive programs to further motivate staff and sustain
performance gains.
 ROA is in decreasing trend from the last five years which indicates total
assets are not properly utilized. The bank could focus on optimizing
operational processes and cost management strategies to enhance asset
utilization and improve ROA.
 The bank may need to reassess its business model, product offerings, or
market positioning to adapt to changing economic conditions and restore
profitability metrics.

31
 MPS of the bank has been decreasing. A thorough review of the bank's
financial performance, growth prospects, and competitive positioning is
necessary to identify areas for improvement and restore investor confidence.
 The bank should review its dividend policy and earnings management
practices to ensure alignment with shareholder expectations and market
conditions, aiming for consistency and stability in financial performance
metrics.
 The bank's net profit margin has a fluctuating trend during the years.
Therefore, conducting a thorough analysis of cost structures and revenue
streams to identify areas for operational improvement and cost optimization.
 Developing flexible strategies to adapt to changing market conditions and
enhance the bank's ability to maintain sustainable profitability amidst
fluctuating net profit margins.

32
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 Appendices

Appendix 1
Capital Structure of the NBL

Appendix 2
Major indicators of the bank